New Home Builders are Optimistic

Coastline Model

As one of the largest employer of the skilled and unskilled workers, the preconstruction home builders have been the backbone of the US economy on a larger scale than perhaps auto manufacturing or any other sectors in the nation.  The economic meltdown had the most adverse effect in the industry that went from having lines of the buyers for the pre construction units outside their office to the fire sale of their inventory along with discounts and incentives that ate the bottom lines and forced some to the bankruptcy.

The new survey conducted by Ernst & Young, LLP meanwhile  indicates the growing optimism among the home builder with a whopping 95% projecting the end of the downturn and the beginning of the profitability in 2013.  According to the same report the new home builders’ concern of the past two years about the interest rate and the ability of the home buyers in obtaining loan have been diminished but they believe that they will reach the benchmark of one million home sold in 2015 or 2016 instead of once considered 2014 or 2015.

This is in line with our prediction for 2012 being a start point for new home construction and improving from there on.  The only reason that 2012 could not witness better days for new home construction was the lingering foreclosure filings by the banks that came to a halt after the Robo-Signing scandals force the financial institutions to stop all filling.  Absorption of the deeply discounted bank owned homes or REOs will be the deciding factor on when and how the construction of new homes would see a real start.  Construction of new homes would not make any economic sense, as long as there are homes at below the market prices out there.